Australia’s build-to-rent (BTR) sector is poised for record growth, with 6,000 new units set for completion in 2025, signaling a milestone year for the industry.
According to Knight Frank’s Australia Build to Rent Update Q3 2025, this year’s completions will eclipse the previous high of 4,660 units delivered in 2024, setting a new record for the fast-growing sector.
Knight Frank Partner and Head of Alternatives Australia Tim Holtsbaum said solid fundamentals underpinned confidence in the sector.
“The macroeconomic environment plays a big role in the growth of BTR,” he said.
“Conditions on this front are now stabilising, and if interest rates continue to fall, as predicted, this will underpin investor confidence in the sector.”
Melbourne Leads the Nation
Melbourne continues to set the pace for BTR delivery.
Two new projects — Claremont Tower and Madison Grand — opened in the city this year, lifting Victoria’s total pipeline to 25,829 units.
That includes 13,198 either completed or under construction, which is the largest concentration in the country.
New South Wales is not far behind with 22,025 units, buoyed by 5,335 already delivered or underway.
Queensland ranks third with 16,279 units. Brisbane added Arklife Cordelia and Liv Anura this year, reflecting the city’s appeal to investors amid surging rental demand and tightening vacancy rates.
Other states remain comparatively small markets.
The ACT has just 2,824 units either completed, under construction or in planning, while Western Australia and South Australia trail with 2,119 and 1,269 units, respectively.
Momentum to Ease From 2026
Despite record activity this year, the Knight Frank report forecasts a slowdown ahead.
Around 4,000 units are expected to finish in 2026 — one-third fewer than this year’s peak.
The softer outlook reflects feasibility hurdles that have weighed on developers in recent years.
Rising costs, tight financing, and higher interest rates have left many projects stalled, with the report finding around 20,500 units are currently approved but not yet under construction.
Mr Holtsbaum said the challenges were cyclical rather than structural.
“Like most asset classes, delivery ebbs and flows with demand and supply dynamics and is further influenced by planning timeframes, land costs, feasibility pressures, etc,” he said.
“These challenges are common across real estate sectors and do not undermine the long-term fundamentals of demand.”
Push for Policy and Stimulus
While market conditions are beginning to stabilise — with cost inflation easing, interest rates edging lower and access to capital improving — the report argues that policy support will be crucial to sustain growth.
Recent reforms, including the NSW Government’s recently announced 50 per cent land tax exemption, were identified as positive steps.
However, the report also noted that inconsistent tax settings between states and barriers for foreign investors continue to limit the sector’s competitiveness against international peers.
“Supportive government policy will also be key in sustaining BTR growth in Australia, including a tax environment that is easier to navigate and lower taxes for foreign investors to encourage investment in the sector,” he said.
“With the delivery of housing supply key for many governments, we believe there will be supportive policy for the sector to come.”